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Vietnam: Rapid growth of online delivery services
The sudden, unexpected and virulent spread of the Covid-19 pandemic brought about a change in perception and planning in consumer sales behavior, and many well established businesses made a strong shift towards online delivery servicing.
This new trend brought with it new opportunities for many existing companies to expand or create new online delivery units, offering jobs to many workers who had been laid off. Companies such as Grab, Be, and Baemin are continuing to flourish in delivery services in the ongoing Covid-19 pandemic phase.
Race to reach consumers
The present trend of using delivery services for a vast range of products, from foods to even air and bus tickets at a click on an App is now a convenient and flexible solution for many consumers, especially young consumers. Your choice of groceries is delivered to you on your doorstep and payment methods too are very flexible, as consumers can choose to use either cash, cards, or e-wallets to pay for their orders.
Since the end of December 2020, the Grab Company expanded it ride hailing service with a shopping and home delivery service as well, using its already existing infrastructure in a more innovative way. With this new home delivery service, Grab can offer its vast network of consumers the option to buy items online in some traditional markets linked to the company App. To this, Grab then added GrabMart service, which allows consumers to buy fresh or canned fruits and vegetable from supermarkets, convenience stores, or some other food chains via online orders.
Before Grab, the Vietnamese ride-hailing app Be had already introduced its own delivery service to its customers for essential foods. Baemin also has a food delivery application for its consumers. All these home delivery services have recorded an impressive growth rate, in particular, the Be company has shown a growth rate of 200% to 300% since it was first introduced. GrabMart too has maintained a steady high growth level, especially after Grab joined hands with some big chains such as Big C and Coop Mart, and are now reaching a larger household consumer base.
The concept of a grocery delivery service is not new in Vietnam. In 2018, the Now App brought this service to its users, but now the Covid-19 pandemic has enhanced the usefulness of this service even more, especially for essential daily needs such as food and medicines. There is also a question on people’s minds if this sort of service will continue to flourish even after the pandemic has regressed. The answer is probably negative, as this convenience is habit forming and therefore will be difficult to break. An earlier food order service is a prime example of this. A study by Nielsen Vietnam, a market research company, has shown that upto 64% of consumers say that they will continue to use the food delivery services much more often after the Covid-19 pandemic is over.
However, where several companies have moved swiftly in developing delivery services, the well-known Gojek Company has refrained from doing so. When you open the Grab App, you can see immediately all the services being offered such as delivery, shopping, and paying bills. On Be App you can see car booking, delivery, shopping, bus and air ticket booking. On the other hand, on the App for Gojek, one of the top three most developed ride-hailing companies in the market today, there are only motorbike booking but no car booking, besides food delivery. Consumers are still waiting for Gojek to introduce more convenient services.
More jobs opportunities
The development of delivery services meets the needs of a huge consumer base, and also offers more jobs to so many people who have lost their jobs during the relentlessly ongoing Covid-19 pandemic. According to the General Statistics Office, as of December 2020, there were more than 32 million people aged 15 years and above who have been negatively impacted by the Covid-19 pandemic. This figure includes people who have lost their jobs, or have had to reduce working hours, or have little or no income at this time. In the economic sector, the service sectors have been the hardest hit, followed by factories, manufacturing and construction, and finally the agriculture, forestry, and fisheries sectors.
Many workers have had to turn towards such jobs in order to feed their families in the current very trying times. In a recent labor situation report, the Vietnam General Confederation of Labor has said that there is a tendency of unemployed or laid off workers to switch to working for technology service enterprises such as Grab, Be, Now, and Gojek as this work can be easily accessed as well as withdrawn at will. There is also no stress or pressure in this work, and cash payments are quick and substantial, with work timings being very flexible.
Although, this shift towards such jobs is being seen only as a temporary solution until the pandemic is completely wiped out. Young workers with college and university degrees who were previously trained in enterprises, are using this method of earning money as a way to get by during the pandemic phase. In an interview with Saigon Investment, Mr. Tran Anh Tuan, Vice Chairman of the Ho Chi Minh City Vocational Education Association, acknowledged that young qualified and trained persons who choose these jobs for short-term commitments can benefit at a time when jobs are hard to find. However, if they choose these jobs as future careers, and also hope to earn high salaries that will be most unrealistic.
The entry of more convenient services and use of related technology applications have thrived during the ongoing Covid-19 pandemic, besides also opening several new business opportunities for a new type of consumer market. In mid-March, a Singapore insurance technology company, Igloo, officially opened in Vietnam and joined hands with Loship, a Vietnamese food delivery and e-commerce startup with more than ten services on its App such as food delivery, car order, shopping, laundry, medicine, and even flower delivery. The partnership with Igloo allows Loship to provide work to 70,000 drivers, who are paid shipping fee even if the consumer does not accept an order. This insurance package comes at a fee of VND 28,900 per month, but is a good way to minimize on damages caused by refusal of order delivery.
SGGP
Source: https://vietnamnet.vn/en/business/rapid-growth-of-online-delivery-services-723999.html